August 2006
For Catholic Diocesan Newspapers

Steve Pehanich
Executive Director
Catholic Charities of California

Ten Years of Welfare Reform—More Work for Some, More Poverty for Others

Whenever Washington politicians want to change the "system" it sends chills up my spine. Such was the case in 1996, when the rallying cry—"End welfare as we know it,"—was raised on Capitol Hill.

What were they concocting? Whatever it was, it couldn't be good.

Much like the current debate on the immigration system, people felt the welfare system was broken. Unfair and inaccurate stereotypes were carelessly flung around, just like today. And dire predictions of imminent doom were spun from partisans left and right.

With a Republican Congress and a Democratic President, the outcome was far from certain.

The result was a redesigned welfare system—renamed Temporary Assistance to Needy Families (TANF). It focused on moving people toward work, gave states room to experiment with different ideas, and set strict time limits on how long people could receive aid.

After 10 years, it turns our neither side was entirely accurate in its picture of the future; but neither was entirely wrong. Such is the nature of politics. But sorting through the mass of data and statistics to analyze the benefits and costs of the new work-focused welfare program isn't easy.

On the plus side, more people are working. Caseloads have decreased and income is up for some.

On the downside, the number of people in "deep poverty" (one-half the Federal Poverty Level) has been expanding since 2000. And most disturbing of all, the number of children living in poverty has increased. According to the 2000 census, more than 12 million children now live in poverty. These facts alone are cause for alarm.

With all due respect to social scientists and statisticians, it is hard to separate the impact of welfare reform from the effects of a robust economy in the late 1990s or recession of the early part of this decade.

The welfare system does get many people to work—but does not cope very well with difficult cases and allows others to slip through the cracks.

Those difficult cases are the ones that have multiple barriers—illness, disabled children, or dropouts. Many of these people are the ones that the five-year limits most impact.

Another serious issue: although people are working - they are just not earning enough to make a decent living. The minimum wage, for instance, has not been increased in nearly a decade.

By December this year, we will have had the longest span in the history of the minimum wage law that the level has not increased. Purchasing power has not been this low for minimum wage workers since 1955.

Faith-based groups are filling in much of the gap that government programs do not address or do not address well. For instance, Catholic Charities across the nation have seen a rise in the need for emergency housing assistance, food programs and the like.

Welfare reform—while it focused on getting people to work—has been shown not to have a strong enough emphasis on vocational and educational training.

In some cases, the demand that people increase work hours meant they had to set-aside educational activities and support structures (like child care) that would have increased their wage-earning potential. And, one study found that many mothers lost their new jobs caring for sick children.

We've had a decade of welfare reform mixed with a recession, a weak recovery and a Federal government endeavoring to place more and more responsibilities on the states. What have we got to show for it? Working poor, falling just shy of making ends meet.

The states have taken up much of the slack from the Federal government, but the funds they receive from the Feds keeps on going down.

Some suggestions:

Work incentives and supports need to be fully funded by the Federal government and enhanced to ensure people, especially single moms, can work without having to place children in substandard day care or forcing them to neglect their children.

The minimum wage should be increased, and the Earned Income Tax Credit strengthened. (The EITC supplements low-wage earners' income through a tax credit.)

Some accounting for regional differences in cost-of-living levels is necessary, especially if you are in a high housing state like California or New York.

Most importantly, the children—the "least among us"—are not fairing as well as they should. Ten years of reform should not mean 12 million children are left in poverty.

Now you know why politicians' fixing any "system" worries me.

Steve Pehanich is the executive director of Catholic Charities of California. He supports public policy and other initiatives for the twelve Catholic Charities agencies. Contact him at spehanich@cacatholic.org.